Last update 6/6/2012 7:00:00 AM (GMT+7)
  

BUSINESS IN BRIEF 6/6
CPI in June forecast to rise 0.1-0.2pct

The national consumer price index (CPI) is forecast to edge up by 0.1-0.2 percent in June against the previous month, says the Ministry of Industry and Trade's Market Management Board.    

Prices of goods, especially food and foodstuff, remain stable; interest rates of commercial loans and oil prices are going down, the board said.

However, the market watchdog said there are some factors that may drive up the CPI in June. Examination season is drawing near and it is also peak season for tourism, thus the prices of food and services at restaurants will go up.

This is also the beginning of the wet season, therefore prices of rice, fruit and vegetables may increase.

The CPI in May showed a month-on-month increase of 0.18 percent and a year-on-year rise of 8.34 per cent, said the General Statistics Office.

In the first five months of this year, the CPI increased 13.3 percent over the same period last year.

Shares rebound despite global jitters

Shares rebounded yesterday as investors bet on bargain shares. On the HCM City Stock Exchange, the VN-Index regained 1 per cent from a three-month low on Monday to close at 421.02 points.

The value of trades decreased 17 per cent from the previous session to over VND2 trillion (US$99 million), while volume reached nearly 102 million shares.

Half of the total volume was traded through negotiations, including 51 million shares of Sacombank (STB), worth VND1.28 trillion ($61 million).

Advancers outnumbered decliners by 187-54. Twenty-one of the 30 leading shares by capitalisation and liquidity rose, lifting the VN30 Index by over 1per cent to 498.02 points.

Tan Tao Investment Industry Corp (ITA) led trades in the morning with 2.3 million shares changing hands. ITA closed up 1.4 per cent to VND7,200 per share.

On the Ha Noi Stock Exchange yesterday, the HNX-Index also gained 1.48 per cent over the prior day's close to end yesterday's trades at 73.58 points. Volume was sluggish, declining about 15 per cent to 37.5 million shares, worth about VND370 billion ($17.6 million). Gainers outnumbered losers 253-46.

VNDirect Securities (VND) was the most-active share on the day, with 3 million changing hands, before rising 6.4 per cent to settle at VND11,600 per share.

Analysts said Monday's steep slumps overshadowed yesterday morning's more modest declines, but risk appetites soared in the afternoon, rescuing both indices from another fall.

However, Bao Viet Securities Co analyst Nguyen Xuan Binh noted that high sell pressures from overseas investors which focused on large-cap stocks continued to negatively affect index movements. Foreign investors concluded yesterday as net sellers on both exchanges, unloading shares worth a combined VND113.5 billion ($5.4 million).

"This may come from the selling activities of exchange-traded funds for redemption purposes," Binh commented on a research note. "It's considered a remarkable risk for the local market if world stocks continued declining."

Improving efficiency of ODA capital

The project to attract, manage and use official development assistance (ODA) capital and other preferential loans from donors in the 2011-2015 period will be a new turning point in improving the effectiveness of funding resources.      

As a middle-income country, Vietnam is persisting with the process of economic restructuring with a focus on restructuring public investment, State owned enterprises (SoEs) and commercial banks.

To this end, Deputy Minister of Planning and Investment Cao Viet Sinh says, it is imperative to mobilize domestic and foreign funding resources, especially ODA from developed countries. By mid May, only US$530 million in ODA or 25 percent of the set target was disbursed, much lower than in the same period last year, due to the impact of the global economic crisis and Vietnam’s economic slowdown over the past years.

According to the Ministry of Planning and Investment (MoPI), to fulfill the socio-economic development targets set for 2011-2015, the country needs an estimated ODA amount of US$32-34 billion from international donors of which US$14-16 billion or 6 percent of the total social investment will be disbursed.

Therefore, revamping the ODA-related legal framework is becoming all the more urgent than before to ensure the transparent and effective use of the funding for socio-economic development.

The Vietnamese Government has recently adopted a project to attract, manage and use ODA capital and other preferential loans from donors in the 2011-2015 period. It is coordinating with relevant agencies in revising Decree 131 to deal with donors’ requirements and problems arising thereafter.

Hoang Viet Khang, Head of the MoIT’s Department for External Economic Relations says the project aims to improve the legal environment and the effectiveness of ODA.

The use of ODA capital and other preferential loans must take into account the competitive edge and reciprocal support between ODA funding and other development capital resources to ensure safety for public debts, he says.

A comprehensive legal framework for managing and using ODA capital and other preferential loans will make it easier for businesses to access ODA funding through regional and international cooperation programmes.

State management agencies, for their part, should enhance their role in coordinating and managing ODA capital to create the best possible conditions for private businesses to use ODA and preferential loans effectively.

Sectors and areas which are eligible for ODA and preferential loans from donors in 2011-2015 will focus on building a uniform infrastructure system, supporting social infrastructure projects, developing high-quality human resources, boosting agriculture and rural development and building the legal system and institutions of the socialist- oriented market economy.

A number of other ODA-funded projects will be targeted towards protecting the environment and natural resources, coping with climate change, stimulating green growth, and promoting investment, trade, production and business cooperation.

Slumping global prices fattening local fuel firms

Fuel prices on the global market at this week’s opening session still failed to escape the downward trend that started at last weekend’s closing, enabling local fuel wholesalers to enjoy fat profits.

WTI crude oil opened yesterday at slightly above US$83 a barrel, before dropping to $82 a barrel.

Meanwhile, Britain’s Brent oil settled at $98 a barrel, down by more than $3 compared to last weekend.

In Singapore, where Vietnam sources more than 40 percent of its fuel supply, A92 gasoline price also suffered a steep plunge.

On June 1 the price stood at $108.35 a barrel, losing $20 a barrel compared to the rate set in early May.

Similarly, kerosene also dropped by $20 a barrel to only $113.57, and diesel to, $115.18.

Although the Ministry of Finance has cut retail fuel prices in Vietnam in late May, insiders say prices can be cut further now.

The 30-day average prices of fuel from June 1 and earlier are now VND900 a liter lower than retail prices, fuel traders said. This means that fuel wholesalers are raking in VND1,500 ($0.072) on every liter of fuel.

On May 23 the finance ministry slashed retail prices of petrol and oil in Vietnam by VND300 – 600 a liter, the second price cut that month, following the VND300 per liter reduction on May 9. The import duty on fuel was also reinstated to 4 percent, up from zero percent.

The retail price of A92 gasoline is now VND22,700 ($1.08) a liter, while diesel oil is VND21,200 a liter.

Respective prices of fuel oil and kerosene are VND18,900 a kg, and VND21,100 a liter.

Fuel prices have been hiked two times so far this year, gaining VND3,000 a liter in total. The latest increase occurred on April 20.

The question of whether fuel retail prices will be slashed by an amount equal to the VND3,000 a liter it has been hiked was raised during a regular press meeting held by the Ministry of Finance on June 4.

Responding to the question, Nguyen Xuan Chien, deputy head of the ministry’s Domestic Market Agency, said: “It’s impossible to do so.”

“Fuel price management should be done in a way that can ensure the interests of three parties: the government, wholesalers, and consumers,” he explained.

“Besides cutting prices, other measures such as increasing the deduction for the fuel price stabilization fund, or hiking import duties, should also be applied,” the official added.

“Whether or not prices will be slashed in the future will be determined by the finance ministry.”

Retailers, producers in hot water as demand shrinks

In the normally low-sale season of the year, many moves have been taken to boost demand to cut unsold stocks.

But consumers just show interests in food/foodstuff or essential commodities only, while seeming indifferent to durable goods, like electronics or clothing.

Customers’ indifference can easily be found at fashion shops on Hai Ba Trung Street in District 3, Ho Chi Minh City, as banners or panels showing “15-50 percent discount”, "buy 1 get 1", and "special discount", are hung outside the shops.

Despite the price cuts, sales and security employees have nothing to do these days but reading newspapers, playing mobile games and chitchatting.

A group of sales employees told Tuoi Tre a joke, that the numbers of sales employees are more than buyers. Occasionally, there are some guests, but mostly they will go away without buying.

Even supermarkets, once witnessing long lines of shoppers queuing up at checkout counters, now face the same fate.

On May 30, in Big C Hoang Van Thu in Phu Nhuan District, a series of yellow panels showing discounts information and promotions were hung over the shelves only to see some people walking around, looking and leaving.

Quynh Nhu, a customer from Phu Nhuan District, said: "Now, there are more promotional programs in the supermarket, but I mostly buy essential products such as food, fruits and vegetables, rarely strolling to clothing and electronics shelves."

Traditional markets are also in the same boat. In the booths selling silk fabrics, readymade garments Binh Tay Market in District 6, Tuoi Tre found only a few customers there.

The situation at the An Dong wholesale market in District 5 is the same, with many sellers saying the number of customers is gradually dropping since the start of 2012.

At Pham Van Hai Market in Tan Binh District, many sellers still cling to their stalls until late afternoon for unsold stocks.

Phuong, owner of a pork stall in this market, said: "Earlier, all my available stocks were sold out by early afternoon. Now, I cannot rely on retail customers and have to sell to restaurant and food shops at wholesale prices.”

According to pork sellers, the supply of meat at this market has been reduced by more than half in recent months. Still, they often have unsold stocks.

Likewise, at the markets of Xom Chieu Market in District 4, Tan Dinh in District 1, and Tam Binh in Thu Duc District, a series of small traders have closed or scale down their business.

According to Tran Thi Thai Thanh, deputy director of Pham Van Hai market management board, as of May 2012, in the fresh food sector, there were 100 out of 403 stalls that stopped selling.

Big-scale retailers, like Co.op Mart, also see negative growth rates in sales and revenue.

At supermarket chain Vinatextmart, purchasing power decreased by 7-10 percent over the same period last year.

Solutions applied to soar up demand, like discounts and promotions, seem useless, said Huynh Quang Khai, head of seasoning and spices sauce firm Nam Duong.

“Consumers are now spending less, rechanneling their money for debt repayment and savings."

To overcome difficulties, besides strengthening the promotion programs, Co-op Mart is reviewing the system thoroughly for cost saving maximization, and is cooperating more closely with distributors to lower prices.

Meanwhile, Vinatextmart is focusing on developing mini supermarkets with an area of 400-600m2.

Thu Huong in Hoang Hoa Tham Market in Tan Binh District said she used to sell raw pork, but has switched to selling on demand now.

Industrial production up 4.4pct

The domestic industrial production index in May increased 4.4 percent over the previous month, the Ministry of Industry and Trade (MoIT) announced at a meeting in Hanoi on June 4.
     
While the processing and power, gas and water distribution sectors rose 5.2 percent and 1.2 percent respectively, the mining industry declined 3.7 percent over April.

In all, the index inched up 6.8 percent over last May, said MoIT.

The index improved over the first quarter but it dropped significantly compared to the same period in previous years, said MoIT Deputy Minister Hoang Quoc Vuong.

Concerns over what was termed the inadequate reduction in petrol and gas prices were raised at the meeting, as global prices have fallen further than domestic rates.

MoIT said it will co-operate with the Ministry of Finance to work with gas dealers in a programme to ease prices.

In five months, trade deficit reached US$622 million, accounting for 1.45 percent of total export turnover.

Vietnam still reported higher imports than exports with some Asian markets, such as mainland China (US$5.3 billion), ASEAN region (US$2.5 billion), the Republic of Korea (US$3.7 billion) and Taiwan (US$2.7 billion).

However, foreign invested companies, excluding those involving crude oil, posted a trade surplus of US$960 million.

In order to both boost exports and tackle high inventories, the market watchdog said businesses should seek more ways to promote trade and expand their distribution networks. One possible measure is to actively co-ordinate with banks and their own investors.

Vietnam needs to stabilize macroeconomy

Delegates to an international seminar in Quang Tri province on June 4 recommended that Vietnam implement monetary, credit, consumption and production solutions to control market prices and stabilize its macroeconomy.
    
In the context of the slow economic recovery, these solutions will help shore up business production, fuel domestic sales and revitalize the stock and property markets, said the delegates.

They stressed the need to accelerate the implementation of both domestic and foreign-invested projects so as to increase overall demand, reduce stockpiles and promote economic growth.

Deputy Minister of Planning and Investment Cao Viet Sinh said the Vietnamese Government is taking measures to generate jobs for local people and reduce the unemployment rate in industrial zones. The Government is also focusing on ensuring social welfare and increasing the effectiveness of official development assistance (ODA) and foreign direct investment (FDI) loans.

The seminar, held jointly by the Ministry of Planning and Investment and the World Bank (WB), was part of the 2012 mid-term Consultative Group (CG) Meeting due to open in the central province of Quang Tri on June 5.

Deputy Prime Minister Hoang Trung Hai attended the seminar together with representatives from ministries, central agencies, provinces and cities, as well as international donors.

Quang Binh province in preparation for international trade fair

Quang Binh province is gearing up for the Vietnam-Laos-Thailand international trade Fair, scheduled to take place at Dong Hoi stadium from June 15-20.
    
350 stands will be put up by domestic and foreign enterprises to showcase their products, and seek opportunities for business cooperation and market expansion.

Quang Binh will also have the chance to introduce its potential for cave tourism.

DOC’s preliminary decision against Vietnamese hangers

The US Department of Commerce (DOC) has preliminarily decided against steel garment hangers imported from Vietnam.
    
Accordingly, Vietnamese producers and exporters will receive anti subsidy countervailing duties (CVD) ranging from 11.03 to 21.25 percent on their steel garment hangers.

For instance, Haminco companies and Cao Quy companies will be imposed CVD of 21.25 and 11.03 percent respectively. All other Vietnamese producers and exporters will receive CVD of 16.14 percent.

Petitioners including the US producers M&B Metal Products Co Inc, Innovative Fabrication LLC/Indy Hanger, and US Hanger Co LLC. lodged their anti-dumping and anti-subsidy complaints on Vietnamese steel garment hangers at DOC and the US International Trade Commission (ITC) on December 29, 2011. DOC decided to conduct its investigation into the products on January 18, 2012.

DOC will announce its final decision on October 9, 2012.

If DOC and ITC confirm that Vietnam’s subsidized steel garment hangers have caused significant damages to the domestic industry, CVD will be imposed as from November 30, 2012.

Clothes hangers imported from Vietnam were estimated at US$31.9 million in 2011, US$28.9 million in 2010 and US$19.5 million in 2009.

Steel industry sees low May consumption

The steel industry has seen a strong decrease in production and consumption in May against April, the Ministry of Industry and Trade reports.

Specifically, the production volume of construction steel in May alone reached 410,000 tones, a reduction of 50,000 tonnes against April.

In the first five months this year, steel production reached nearly 2 million tonnes or a decrease of 198,000 tonnes over the same period last year. Also in May, stockpiled volumes stood at 320,000 tonnes, or up 65,000 tonnes against April.

Steel consumption is estimated to have reached 370,000 tonnes last month or a decrease of 73,000 tonnes against the previous month.

The ministry reports that steel production companies have to moderate their production to minimise stockpiled steel volumes. It said the import of steel ingots also reduced due to stockpiled volumes.

In the first five months, the import of pig iron is estimated to have hit 168,000 tonnes worth $108 million, a 67 per cent decrease in volume and 67 per cent in value over the same period last year.

Due to sluggish steel consumption, local steel manufacturers have had to slash their selling price between VND100,000 to VND150,000 per tonne, attributed to a finance shortage amongst property developers.

It is predicted that in the next months, steel prices would not increase much. However, steel consumption may see positive results thanks to further interest rate cuts and a VND29 trillion (US$1.3 billion) finance package aimed to reschedule business tax.

A representative of a steel company said the most difficult thing facing the steel industry was low consumption and not the rising and declining price of raw material. However, the real estate sector was always a key consumption partner of the steel industry that has been given easier loan access thanks to the Government's loosened credit policy, which has had little impact.

Nguyen Tien Nghi, vice chairman of the Viet Nam Steel Association, said in the time to come the steel industry would continue facing negative effects of the global downturn and weak local economy.

The local steel industry will continue to see difficulties as Government resolution 11, aimed to curb inflation and stabilise the marco-economy, remains effective.

The association is determined to minimise production costs to create competitiveness and will offer reasonable prices and spur exports in order to reduce pressure on local consumption, Nghi said.

According to the steel association, to enhance local steel consumption, an increase in public spending was the most important issue to be addressed by steel producers. By doing so, they may have an opportunity to sell their unsold steel to get back investment capital and pay off debts.

Binh Duong licenses $95m trade centre of 62,000 sqm

AEON Viet Nam Ltd Co has received an approval from the Binh Duong Department of Planning and Investment to develop a US$95 million trade centre and entertainment complex in the province.

The centre will span 62,000sq m in Thuan An Commune.

Dong Nai industrial zones attract $936m investment

Industrial zones in the southern province of Dong Nai have drawn a total investment capital of US$936 million during the first five months of this year, exceeding the target set for the whole year.

In May alone, the zones attracted 27 projects, including 22 foreign-invested ones worth a combined $594 million, said the zone's management board.

The province is now home to 32 zones, attracting 1,170 projects to date with capital totalling $14.43 billion.-

Singapore Airline's SilkAir aircraft lands in capital

SilkAir, the regional wing of Singapore Airlines, to launched its first flight to Ha Noi, bringing its route network to 41 destinations in 12 countries.

Ha Noi is SilkAir's second destination in Viet Nam, after Da Nang. The thrice-weekly flights depart Singapore on Tuesdays, Thursdays and Sundays with a same-day return flights from Ha Noi on Airbus A319 and A320 aircraft, both with business and economy class cabins.

This new service will complement Singapore Airlines' daily flights to Ha Noi. Together, SilkAir and Singapore Airlines will offer a total of 10 round-trip services a week.

Binh Dinh Province to host week-long agro-industry fair

A week-long fair in agriculture and industry will be held tomorrow in the central province of Binh Dinh.

Co-organised by the provincial Trade Promotion Centre and HCM City-based Phuong Nam Trade and Service Co, the event will showcase agricultural products, textiles and garments, engineering, fertilisers, electronics and automobiles in 300 booths.

Works starts on detergent factory in Hai Phong City

Soft Industry Corporation (SIC)yesterday officially started its construction of a new detergent production plant in Hai Phong City's Dinh Vu Industrial Zone.

Established by Japanese Toyota Tsusho, Toyota Tsusho Viet Nam and Taiwanese Formusan Union Chemicals, the plant will cover 1.5ha in the zone's petrochemical area.

When completed, the US$6.6 million project will produce 24,000 tonnes to service the detergent industry.

The plant was the 7th Japanese-invested project in the zone. The zone was expected to have two more Japanese investors by end of this year.

Forum debate green economy
 
A local green economy should be based around the manufacturing and sustainable agriculture sectors, environmental experts suggested at the "Green Economy and Sustainable Development" workshop held in northeastern Quang Ninh Province yesterday.

To ensure successful transition towards such an economy, defined by the United Nations Environmental Programme as low carbon, resource efficient and socially inclusive, Viet Nam should invest in green technology to produce eco-friendly products and promote sustainable consumption, said Pham Van Loi, director of the Institute of Environmental Management.

He said the country should use a sectoral approach to ensure the green model is rolled out evenly amongst different areas of the economy, unlike the present haphazard situation, which has allowed for serious environmental pollution.

Professor Nguyen Dinh Tuan, from the HCM City Natural Resources and Environment University, in agreement, said integrating environmental factors into development planning was a vital step to achieve sustainable development and green growth.

He said the Government has paid increasing attention to embrace environmentally inclusive principles. "For example, it is now mandatory to have environmental impact assessments in socio-economic development planning or construction planning, even though implementation at local level remains limited," he added.

More than 2,500 people including officials from the southern province of Binh Duong, businesspeople and residents attended a ceremony on Sunday observing the World Environment Day with an event called "The Green Economy: Does it include you?"

This is the 5th consecutive year that the event is being organised by SetiaBecamex Co under the direction of the province's People's Committee, Department of Natural Resources and Environment and other relevant agencies.

At the ceremony, local businesses were honoured and recorded in the Green Book of 2012 for making significant contributions to environmental protection.

Tuan said it was the reason why the Government should work on improving the integration process of environment factors in planning.

According to the National Environment Report, Viet Nam has low-quality growth in terms of labour and natural resources while the contribution of science and technology remains limited.

He said to prepare for the new growth model, there was a need to invest heavily into science and technology to increase resource efficiency and productivity.

Tuan said if consumers went for green products, the market would consequently follow with producers providing eco-friendly goods.

Nguyen Danh Son, from the Viet Nam Association for Conservation of Nature and Environment, said that to convince every actor in the economy to pursue the green growth model, there should be quantitative measures to reflect the benefits of going green.

"Many enterprises feel reluctant to pay environmental-related costs because they only see them as something that would reduce profit margins," he said.

"They need scientists and policy-makers to tell a different story so they will be more willing to act."

The workshop is part of activities celebrating World Environment Day today.

Dung Quat hands oil ship to PV Trans

Dung Quat Shipbuilding yesterday handed over a 104,000 thousand tonne oil ship to Quang Ngai PV Transportation Corporation (PV Trans).

The new ship, named PVT Mercury, is one of the largest obtained by PV Trans with 13,560 horsepower, around 245 m in length, 43 m in width and nearly 20 m in height. The ship's average speed is 15 knots per hour.

Doosan Man B&W, a well-known Korean producer, produced the ship's engine.

After handing over the ship, Dung Quat Shipbuilding started work on a new 105,000 tonne vessel.

According to the company, they are currently also handling ships for repair. Two months ago, the company was handed an oil ship named VSP 01, 262 m in length, 46 m in width and about 24 m in height. The vessel, according to the company, is the largest to be fixed by the company and can contain up to 154 thousand tonnes of oil.

Campaign to boost Vietnamese product launched in Germany

The week of made-in-Vietnam goods has been launching by German wholesaler Metro Cash & Carry at 117 wholesaler’s supermarkets in the whole Germany.

The campaign is aimed to boost made-in-Vietnam products. 1.4 million business customers in Germany have received a promotion to advertise Vietnamese products.

A Metro Cash and Carry press release says that there is already sizable amount of Vietnamese goods being sold in wholesaler’s supermarket chains in Germany, including fresh and frozen catfish, shrimp, lobster, chili sauce, fried food, furniture, ceramics, textile, household goods…

METRO Cash & Carry’s wholesale business improves the local supply chains and their participants by implementing the group-wide food safety and hygiene standards, by transferring knowledge, and by integrating the local production into the Company’s international sourcing.

Since 2002, through the development support projects with DEG, GTZ, METRO Cash & Carry trained more than 20,000 Vietnamese farmers and fishermen in safe production to increase their yield and their product quality, enabling the local producers to integrate into the modern trade and to grow their business in sustainable manners.

METRO’s direct sourcing concept via the fruit & vegetable platform in Lam Dong province, and the fish platform in Can Tho – Mekong Delta enables the local farmers increase their income while ensuring the METRO’s “from farm to fork” quality control system.

Central coastal provinces attract Russian tourists

Phan Thiet City in the central coastal province of Binh Thuan has become a popular destination for Russian tourists, with Russia ranking 10th on Vietnam's list of top tourism markets.

Previously, most Russian visitors travelled to Vietnam to avoid the winter in their homeland, but now many Russians visit the coastal tourist sites of Phan Thiet, Nha Trang and Da Nang even during the summer months.

According to travel companies, Da Nang International Airport receives an average of one charter flight bringing around 200 Russian visitors every day. Additionally, there are expected to be 12,000 Russian tourists travelling to Da Nang from the end of May to August this year.

Tourism experts say that Russian travellers are attracted to Vietnam’s wild and beautiful beaches.

In January this year, many Russian visitors were thankful for the efforts made by Vietnamese authorities to get stranded visitors back home after the Russian travel company Lanta Tour Voyage suddenly declared bankruptcy. Binh Thuan Province authorities and Vietnam National Administration of Tourism were extremely helpful to Russian tourists who were stranded in Vietnam.  

The country receives about 18,000-19,000 Russian visitors each month, a year-on-year increase of 56 per cent in the first five months which recorded 86,681 travellers.  Russian tourists have become a vital part of the Vietnamese tourism industry particularly in the coastal provinces.

HCMC launches IC development program

The HCMC government has decided to establish a steering committee for the integrated circuit (IC) development program and a team of specialists to assist the committee.

The steering committee consists of 13 members, headed by HCMC vice chairman Le Manh Ha. The committee will determine plans and directions of the IC development program and carry out activities and projects under the program.

In addition, the steering committee will supervise, inspect and assess performance of the works related to the program, and make proposals to the municipal government on the problems arising during the run of the program.

This decision is aimed to implement the resolution of the ninth congress of the HCMC Party Committee on the supporting program for restructuring the city’s economy and changing the economic growth model in the 2011-2015 period.

Although there are several IC designers and producers of probe cards used for IC testing in Vietnam, the country has no IC fabrication plant at present. Experts said Vietnam has conditions to develop the IC industry, such as highly-qualified human resources, low labor costs, available domestic market and IC design capability.

Saigon Industry Corporation (CNS) is after a project to build an electronic chip factory worth hundreds of millions of U.S. dollars. Once established, this factory will be the first industrial-scale chip plant in Vietnam, expected to be located in the Saigon Hi-Tech Park.

The investor said this project will offer conditions to boost IC design development and address the local demand for electronic chips. If successful, the project will contribute to turning the labor-intensive industry of Vietnam into a high value-added industry, and create products with high intellectual content.

Ngo Duc Hoang, director of the Integrated Circuit Design Research and Education Center, under Vietnam National University in HCMC, said the establishment of an IC fabrication plant will be key to attracting human and financial resources, making HCMC become an IC center of the country and the region.

For the semiconductor industry to develop, there needs to be many IC design centers and companies nationwide, said Hoang. Therefore, his center has been rolling out cooperation programs to develop more IC design centers across the country, and hence form an IC design community in Vietnam, build a highly-professional staff and create a link between research agencies and enterprises.

PVI, Sun Life team up for insurance joint venture

PetroVietnam Insurance Joint Stock Corporation (PVI) last week inked a cooperation contract with Canada-based Sun Life Financial to set up a life insurance firm named PVI Sunlife Insurance Co. Ltd.

Under the contract, PVI will own 51% of chartered capital of PVI Sun Life while the rest is held by the Canadian partner.

Both sides are completing legal procedures for the establishment, and the new company is set for official operation by late this year.

Sun Life founded in 1865 is operating in 55 countries worldwide. The firm last year obtained US$23 billion in revenue while its equity and total assets reached US$10.3 billion and US$218 billion respectively.

PVI, a large non-life insurance company in Vietnam, is holding a market share of 21.3%. PVI earned a total insurance premium of US$202 million last year with a revenue growth of 25% from the previous year.

City nods three steel overpasses

HCMC’s authorities have approved three steel overpass projects on Hang Xanh Intersection, Thu Duc Intersection and Lang Cha Ca Roundabout as proposed by the city’s Department of Transport.

However, the city government rejected a similar proposal for the Cay Go Roundabout as it is not urgent.

The presence this year of the three steel overpasses will help ease traffic congestion on the gateways leading to the inner city, especially on busy intersections.

The department will assign contractors to ensure there is no disruption to traffic during the construction process. Contractors will take charge of reviewing load capacity of these overpass projects to guarantee road traffic safety and retain the current cityscape.

The city’s departments of Finance, and Planning and Investment will give priority to the three overpass projects in terms of state budget allocation, paving the way for their timely construction.

Previously, the city’s Department of Transport has proposed municipal authorities to build four steel overpasses with total investment capital of VND990 billion. Construction on the three projects will start this month or early next month and are scheduled for completion by the year-end.

Summer heat prompts businesses to get creative  

As the days become hotter with summer's approach, businesses in Hanoi have come up with imaginative solutions to attract customers.

Despite a lack of air conditioning, business is still good at several cafes and tea stands around My Dinh National Stadium, Dong Da Mound and Tay Son Flower Garden. Their success comes from providing extra services such as home-made cinemas.

Nguyen Huy Hoang, a student of Vietnam Trade Union University, said, “We're happy to meet here even though it's quite hot. Not only can we have a cool drink, but we can catch a free movie. Of course the quality isn't as good as it is in the theatre, but after all, it's free. We can also talk during the movies without being bothered."

Vu Thi Hong, owner of a drink shop near My Dinh National Stadium, started providing free karaoke some years ago.

“After the authorities asked us to stop because it was causing disorder, we switched to showing films. Ever since then, customers have been pouring in," he said.

Booking meals online has also proven to be popular among office workers who do not want to go out in the heat during their lunch break. Delivered meals cost between VND30,000 and VND40,000 (USD1.43-USD1.91).

Vu Thao My, an official at a bank on Kim Ma Street, said, “Even though it's a bit more expensive, it is worth it not to have to go out on hot days. Also, most of the restaurants that deliver are good quality."

The owner of one such restaurant on Hue Street said they provide free-of-charge delivery within two kilometres for orders worth VND150,000 (USD7.17) or more. Costumers are charged from VND10,000-VND50,000 (USD0.47-USD2.39) per order for orders under VND150,000.

Le Thanh Hung, the administrator of a food website, said they usually see a sharp rise in orders when it is extremely hot and during heavy rains.

Many restaurants also offer promotions such as credit accumulation systems. For example, customers who have made more than 100 orders may receive a 10% or 15% discount, he said.

Potential for M&A activities in consumer sector

The consumer sector, with its high growth rate, is expected to be the target for merger and acquisition (M&A) deals in the coming years.    

According to the Vietnam M&A Research Report for 2011-2012 by the Stoxplus Corporation, from January 2011 to March 2012, Japanese businesses were involved in 30 M&A deals worth more than US$1 billion in Vietnam.

The report predicts that Japanese businesses will ramp up their investments in Vietnam, as well as in other Southeast Asian countries and China, in order to deal with economic risks.

In addition to the financial sector, M&A deals in the consumer sector are the most valuable, including C.P. Pokphand Company Ltd acquiring a 70.8 percent stake of C.P Vietnam Corporation worth US$609 million and Japan-based Unicharm Corporation purchasing 95 percent of Diana Vietnam Joint Stock Company, worth US$128 million.

Another major deal involved Marico, India's leading consumer products and services company, buying an 85 percent stake worth US$60 million in International Consumer Products (ICP Vietnam), which is known for its X-Men men’s personal care product line, and premium cosmetics  L’OVITE.

Dang Thi Minh Loan, Deputy Managing Director of Vinacapital, puts this down to Vietnam’s growing consumer market and a young population with increasing incomes.

Businesses are now finding it necessary to build their core value and invest in human resources, she says, adding that the shortages of capital and experience, in addition to high interest rates, are the main problems facing Vietnamese businesses.

In the meantime, major businesses from countries such as Japan and India, which have encountered difficulties caused by natural disasters, tend to invest in foreign countries to expand their markets.

Domestic consumer businesses have mixed feelings about the M&A trend in Vietnam. Businesses that are seeking partners feel positive about the trend, while those who are just interested in developing themselves are not sure if they will get involved in M&As.

However, analysts say that there are some indicators that can help enterprises decide if an M&A is a viable option for them.

They say it is a good idea for businesses with a low level of capitalization, especially those that cannot take full advantage of their biggest assets, to invite partners to get involved in their development, or become a target for acquisition.

Enterprises scoring small debts or large net balances, and those suffering from a brain-drain or a reduction in their market share are also targets for investors.

Enterprises without major stakeholders are very likely to be acquired by investors.

However, most Vietnamese businesses are still not sure if M&A deals will bring them opportunities or risks.

Judging from the successful results of most deals in 2011, Stoxplus CEO Nguyen Quang Thuan affirms this as part of a market-oriented strategy for businesses to develop in the long run.

 
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